Earnings per share fell to $2 from $2.14 a year earlier. Analysts surveyed by Thomson Reuters had forecast earnings of $2.09 a share.

Shares lost 1.8% in early trading.

Oil and gas prices rose to the highest levels ever recorded during a first quarter, although they were below the record levels hit in the summer of 2008. But pump prices turned lower earlier this month, suggesting that they may have already peaked for the year.

Exxon Mobil is not the only big U.S. oil company to take an earnings hit despite high gas prices. No. 3 ConocoPhillips (COP, Fortune 500) also fell short of forecasts when it reported first-quarter results Monday, although its earnings rose. No. 2 Chevron (CVX, Fortune 500) is due to report results Friday.

Exxon Mobil said it spent $8.8 billion on capital and exploration expenditures during the quarter, up 13% from a year earlier. Production decreased by more than 5%, as it was crimped by OPEC quota effects and divestments.

The company returned more money to its shareholders in the quarter, paying $2.2 billion in dividends, as it raised its dividend payment to 47 cents from 44 cents a year earlier.

The company also said taxes paid rose 4.4% to $27.4 billion, despite the lower earnings in the period.

President Obama has argued that the oil industry no longer needs some of the tax breaks, given current prices and profit levels. But the industry argues it already pays more taxes than many other industries and that higher taxes would crimp its ability to hire more U.S. workers.